Connexion A Promising Vehicle For Internet On The Move

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Connexion has very large potential revenues from advertising and vehicle data collection – but investors will want to see actual production contracts signed soon.

The next big expansion of the internet is set to be in cars, and an Australian company is poised to be at the forefront of it.

Connexion Media (CXZ) has two core products, miRoamer, a digital media platform for internet radio and entertainment for web-connected vehicles and mobile devices; and Flex, a cloud-based connected vehicle management service.

MiRoamer signed its first deal, with General Motors, in September 2013. GM is looking at using miRoamer as an in-vehicle app framework for web-enabled vehicles it builds in the United States and Europe. Connexion is working closely with GM on a two-year rolling contract to develop the product. If the technology is approved by GM and certified for distribution, miRoamer may become standard in new GM cars.

MiRoamer was launched at the Paris Motor Show in October 2014 as an Android app. It was the first app in the world to be demonstrated on the new MirrorLink v1.1 touch-screen platform, which has been developed by the Car Connectivity Consortium (CCC) to be the global standard for smartphone and in-vehicle connectivity.

Internet-connected cars are expected to be the next exponential growth segment of the internet: it is all part of the “Internet of Things,” and is enabled by storing data in the cloud. MirrorLink is designed to allow apps to be inter-operable between most of the world’s most popular cars and smartphones.

Also in October, Connexion inked its second deal for miRoamer, with German auto parts giant Continental, which is investigating integrating the app into its state-of-the-art vehicle ‘infotainment’ hardware systems, which it sells to carmakers worldwide. The company followed this in November with a deal with Volkswagen, under which miRoamer could be built into Volkswagen brand Skoda’s new MirrorLink-enabled vehicles, beginning with the new Fabia model. As early as this year, the Skoda vehicles could incorporate the miRoamer technology and the app’s data analytics engine.

Volkswagen also demonstrated the miRoamer app at its stand at the Consumer Electronics Show in Las Vegas last month, both live in a Golf vehicle, as well as in demonstration pods around the stand. Connexion expects miRoamer will initially go into the Polo, Passat, Passat Estate, Beetle and Beetle Cabriolet: the company says these deals alone give miRoamer an addressable market size of approximately 9.5 million vehicles over the next five years.

The miRoamer system was designed to take advantage of the compulsory SIM card that all European-built vehicles must have from 2014. The SIM cards are mandatory so that a car involved in a serious crash can automatically summon emergency service assistance even if the driver is unconscious.

The system can manage and deliver customised and secure digital media content to a number of end user products, including Web-enabled vehicles and car radios, smartphones, tablets, PCs, and other intelligent devices. Users get media content from a common platform using as many electronic devices as they wish. miRoamer enables access to favourite content providers and stations as well as customising the access. Content can be customised to suit the needs of original equipment makers (OEMs) and distributors as well as their customers in different regions and markets.

This year, 20% of all new vehicles built are expected to have internet connectivity as standard. By 2025, says Connexion, this is expected to be 100%.

In November, Connexion launched its other major product, Flex, its cloud-based connected vehicle management service (in partnership with cloud-based telematics service, Buddy.com.) Flex allows a user to manage an entire fleet of vehicles from a central control point, using mobile connectivity. Users can track a range of real-time and historical data, including vehicle location at any point in time, distance travelled, fuel consumption, battery life, engine performance and average speed travelled.

The data is sent to the Flex cloud service through a 3G network connection, where it is analysed and made available to the vehicle owner or fleet manager through the Flex web portal. The data can be retrieved up to one year from date of capture. The Flex hardware required for each vehicle is a small device that connects to the vehicle’s OBD-II port – this port is standard on most vehicles made after 1996.

Connexion has been trialling Flex with vehicle fleet operators in Melbourne and Adelaide, and says it has had “excellent feedback.” The Product is scheduled for full launch in the current quarter, with immediate revenues to be realised via user subscriptions: Connexion says revenue will be generated on a subscription basis, starting at $19.99 per vehicle per month on a 36-month contract, with 12 and 24-month contracts also available.

The company says its addressable market is the fleet market of 2.3 million vehicles in Australia: it says the product enables vehicle owners, fleet managers and drivers to improve productivity, safety and vehicle management, as well as avoiding OH&S (occupational health and safety) oversights.

Connexion also plans to offer a cloud-based media transcoding service enabling customers to stream live content to any device, and a cloud telemetry service that hosts vehicle telemetry data globally, and allows that data to be visualised in real-time using any connected device.

Connexion listed in August 2014 through the shell of security monitoring technology company ECSI, raising $3.3 million. (The issue did not go wholly smoothly: the Australian Securities and Investments Commission (ASIC) forced Connexion to issue a replacement prospectus that toned down some of its forward-looking statements about when revenues may actually start to flow, and the formal certification ­process with General Motors.) At the moment, Connexion does not generate revenue, let alone a profit. It is currently raising $700,000 through the simultaneous issue of option rights and new shares, to fund development and commercialisation of Flex: this offer closes on February 24.

Clearly Connexion can say that its technology has impressed a couple of the world’s largest and most prestigious carmakers. However, the current rights issue prospectus states that Connexion is “currently not a party to any contracts that guarantee a significant or ongoing revenue stream.” Connexion has very large potential revenues from advertising and vehicle data collection – but investors will want to see actual production contracts signed soon. Connexion is a tiny company, capitalised at just $18 million at present – but it is a highly speculative technology play.

James was founding editor of Shares magazine, and oversaw one of the most successful magazine launches in Australia. He has also written for BRW, Personal Investor, The Age and Management Today, and was subsequently personal investment editor at The Australian and editor of financial website, investorweb.com.au